Carroll County v. Smith, 111 U.S. 556 (1884)

U.S. Supreme Court

Carroll County v. Smith, 111 U.S. 556 (1884)

Carroll County v. Smith

Argued April 27, 1884

Decided May 5, 1884

111 U.S. 556

Syllabus

A recital in a bond issued by a municipal corporation in payment of a subscription to capital stock in a railway compauy, that it is authorized by a statute referred to by title and date does not estop the municipality in a suit on the bond from setting up that the issue was not authorized by vote of two-thirds of the voters of the corporation, as required by the constitution of the state.

A provision in the Constitution of Mississippi that the legislature shall not authorize a county to lend its aid to a corporation unless two-thirds of the qualified voters shall assent thereto at an election to be held therein does not require an assenting vote of two-thirds of the whole number enrolled as qualified to vote, but only two-thirds of those actually voting at the election held for the purpose. Hawkins v. Carroll Co., 50 Miss. 735, disregarded, and St. Joseph's Townskip v. Rogers, 16 Wall. 644, and County of Cass v. Johnston,95 U. S. 300, followed.

The issuing of a temporary injunction, which was afterwards made permanent, by a state court, restraining municipal officers from issuing municipal bonds does not estop a bona fide holder for value, who was no party to the suit, from maintaining title to such bonds issued after the temporary injunction.

The decision of the highest court of a state construing the constitution of the state is not binding upon this Court as affecting the rights of citizens of other states in litigation here when it is in conflict with previous decisions of this Court and when the rights which it affects here were acquired before it was made.

This was an action at law brought to recover the amount of certain overdue interest coupons upon municipal bonds alleged to be obligations of the plaintiff in error delivered and payable to the Greenville, Columbus and Birmingham Railroad Company or bearer for $1,000 each. Each bond contains the follow recital:

"The above-mentioned sum being a part of a subscription to the capital stock of the Greenville, Columbus and Birmingham Railroad Company, authorized by the following styled acts of the State of Mississippi, viz., an act entitled 'An act to incorporate the Arkansas City and Grenada Railroad Company,' approved March 5, A.D. 1872, and an act entitled 'An act to amend an act entitled an act to incorporate the Arkansas City and Grenada Railroad Company, approved March 5, 1872,' approved March 4, A.D. 1873."

The act first referred to contained the following:

"SEC. 19. Be it further enacted that upon application by the president or other authorized agent of said corporation to the constituted authorities of any county, city, or incorporated town in the State of Mississippi or adjacent to the main line and branch railroad of this corporation for a subscription to a specified amount of the capital stock of said corporation, said constituted authorities are hereby required without delay to submit the question of 'subscription' or 'no subscription' to the decision of the qualified voters of said county, city, or incorporated town at a special or regular election to be held therein, and if two-thirds of said qualified voters be in favor of said subscription, the constituted authorities of said counties, cities, or incorporated towns are hereby required, without delay, and are authorized and required to subscribe to the capital stock of said corporation to the amount agreed upon, and bonds of the county, city, or incorporated town making the subscription, having such time to run and such rates of interest as may be agreed upon, shall be issued without delay by the authorities of the counties, cities, or incorporated towns, to the president and directors of said corporation, to the amount of said subscription to the capital stock. . . ."

name of the company to that of "The Greenville, Columbus and Birmingham Railroad Company."

The complaint alleged that the bonds and coupons described were delivered by the County of Carroll to the railroad company for value, and that the plaintiff became a purchaser thereof for a valuable consideration before maturity and was an innocent holder thereof without notice.

The defendant pleaded three pleas, of which the first in order is as follows:

"And for further plea in this behalf, said defendant, by attorney, says action non, because it says that on the 3d day of March, 1873, on the application of the president of the Greenville, Columbus and Birmingham Railroad Company, a corporation in this state, the Board of Supervisors of the County of Carroll ordered a special election to be held in said county on the 1st day of April, 1873 at which the question of subscription or no subscrption, by said county, to the capital stock of said railroad company was to be submitted to the qualified voters of said county. And said defendant avers that said election was accordingly held, and said defendant avers that on the 1st day of April, 1873, the names of 3,129 registered voters were on the registration books of said county, and there were in fact on the 1st day of April, 1873, three thousand one hundred and twenty-nine qualified voters in said county, but that only 1,280 of said voters voted at said election, of whom 918 voted in favor of the proposition to subscribe for said stock and 362 voted against it, as fully appears by the returns of the three registrars of said county, filed with the clerk of said board of supervisors of said county. And said defendant says that notwithstanding the refusal of two-thirds of the qualified voters of said county to vote in favor of subscription for stock, the then board of supervisors of said county, in violation of their duty and the trusts reposed in them and in violation of the Constitution of the State of Mississippi, subscribed to the capital stock of said railroad company and issued the bonds and coupons in the declaration mentioned in fact for said subscription for said capital stock in said railroad company, without any statement or recital in said bonds that two-thirds of the qualified voters of said county had assented thereto. And this the said defendant is ready to verify. Wherefore it prays judgment,"

The second was like the first, with the additional averments that the said returns of the registrars of the county, filed and deposited with the clerk of the said board of supervisors of said county, was

"at all times open to the inspection of all persons in the public office of the clerk of the chancery court of said county, and said defendant avers that the said registration of voters of said county was a book of record, deposited and kept in the public office of the clerk of the chancery court of said county as a record book, and open for inspection to all persons, and exhibited the fact that there were 3,129 registered voters in said county at the time of the election."

The third plea was like the second, with the addition of the following:

"And said defendant avers that before the issuance of any of the bonds and coupons in the declaration mentioned, a bill was exhibited by citizens and taxpayers of said county against the said board of supervisors in the Chancery Court of the County of Carroll to restrain and enjoin said board of supervisors from the issuance and delivery of the bonds of said county upon a subscription of stock in said railroad company, and thereupon an injunction was ordered and issued, before the issuance and delivery of any of the bonds and coupons mentioned in the declaration, restraining and enjoining the said board of supervisors from the issuance and delivery of such bonds. And said defendant avers that the said bill of injunction was sustained and made perpetual by the judgment and decree of the Supreme Court of the State of Mississippi. And said defendant says that notwithstanding the issuance and pendency of said injunction and notwithstanding the refusal of two-thirds of the qualified voters of said county to vote for said subscription for stock in said railroad company, the said board of supervisors fraudulently and illegally issued and delivered the bonds and coupons in the declaration mentioned in fact for a subscription for stock in said railroad company. And this the said defendant is ready to verify. Wherefore it prays judgment."

A demurrer to each of these pleas was sustained, and judgment rendered for the plaintiff below, to reverse which this writ of error is prosecuted.

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